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What Texas Could Do to Follow Climate Change Rules

Gov. Rick Perry and other Texas leaders say a federal proposal to combat climate change is a direct assault on energy providers. This Tribune analysis examines what Texas would have to do to reach the goals set forth in the proposal — if that proposal stays as is.

by Neena Satija and Jim Malewitz, Texas Tribune
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June 11, 2014

The EPA thinks Texas can generate 47 million megawatt hours of electricity from renewable sources starting in 2020. After that, the EPA says the state could increase that number each year so that eventually 20 percent of Texas’ electricity would be generated from sources such as wind and solar. Flickr/Duke Energy

To comply with the Obama administration’s recent proposal to combat climate change, Texas must slash carbon emissions from its power plants by as much as 195 billion pounds in the next 18 years — a total more than any other state — according to a Texas Tribune analysis.

According to the newly drafted regulations, if Texas were in compliance, its power sector would emit 329 billion pounds of carbon dioxide per year starting around 2030.Compared with the 524 billion pounds that the state’s generating plants spewed out last year, that would be about a 43 percent reduction. While that is among the larger cuts required, more than a dozen states — including New York, Louisiana and Washington — must reduce their emissions by larger percentages.

Texas politicians have already blasted the regulations — which will not take effect for at least three years — and are likely to challenge them in court. Gov. Rick Perrycalled the proposal “the most direct assault yet on the energy providers that employ thousands of Americans, and fuel both our homes and our nation’s economic growth.” But environmental and health advocates say the rules would help fight climate change and improve public health.

If the rules move forward as proposed after months of public hearings and negotiations, Texas will not have an easy time meeting its carbon target. But the goals are also based, in part, on currenttrends in the state’s power sector, and the Environmental Protection Agency says Texas and other states can basically achieve their goals however they want. Here is how the agency calculated those targets:

1. Make existing coal plants more efficient.Texas’ coal plants are some of the worst polluters in the country, emitting a whopping 2,239 pounds of carbon dioxide per megawatt hour of energy produced. (One megawatt hour can power 500 typical Texas homes for an hourduring mild weather.) With better technology and newer equipment, the EPA thinks U.S. coal plants can become 6 percent more efficient on average by 2020, and stay that efficient through 2030.

Given that Texas' coal plants are relatively inefficient, the EPA argues, some upgrades are reasonable. But the agency estimates that this step alone would save just 19 billion pounds of carbon a year starting in 2020 and continuing through the next decade. And questions remain about how many plants will simply retire rather than spend money on new equipment — particularly as coal competes with cheap, lower-carbon natural gas.

2. Switch from coal to natural gas.This is the most significant —and most controversial — aspect of the EPA’s proposed rules. In 2012, Texas coal plants generated 139 million megawatt hours of electricity. The EPA thinks almost half of that could be pushed out by natural gas, a much cleaner fuel source, in the coming decades. (Natural gas plants emit only 837 pounds of carbon dioxide per megawatt hour of electricity produced.) This step, alongwith more efficient coal plants, could save about 100 billion pounds of carbon dioxide emissions per year, the EPA says.

It’s unclear how realistic that projection is. Across the U.S., cheap, abundant natural gas has steadily eaten into coal’s market share in recent years. According to the U.S. Energy Information Administration (EIA), natural gas’ share of the state’s energy portfolio increased slightly from 48 percent in 2008 to 50 percent in 2012, while coal dropped from 36 percent to 32 percent. However, more recent data from the Electric Reliability Council of Texas, manager of the grid covering most of the state, shows that coal’s share of that grid actually increased in 2013, partly reversing two years of natural gas’ gains.

Given that Texas continually deals with concerns about the electric grid, which has seen recent threats of rolling blackouts in recent years, some experts question whether Texas is ready to replace half of its coal fleet with natural gas, especially with the EPA expecting this to happen by 2020. The state is among those least able to cope with capacity losses, said William Nelson, an analyst at Bloomberg New Energy Finance.

3. Add more renewable energy sources. A lot more. The EPA thinks Texas can generate 47 million megawatt hours of electricity from renewable sources starting in 2020. After that, the EPA says the state could increase that number each year so that eventually 20 percent of Texas’ electricity would be generated from sources such as wind and solar.

In 2012, according to the EIA, says Texas generated about 32 million megawatt hours of electricity from wind, and very little from other renewable sources. That’s almost double of what was produced 2008, and environmental advocates have suggested there’s much more room to grow. The EPA projects that Texas will generate 53 million additional megawatt hours of electricity by 2029. That could save tens of billions more poundsof carbon dioxide per year, assuming that carbon-free renewableswere replacing plants that run on coal or even natural gas.

Still, wind and solar are intermittent fuels — in other words, it isn’t always windy or sunny. As a result, it’s unclear whether such a large shift to renewables would jeopardize Texas' ability to keep its lights on during its hottest days, when air conditioners run on full blast.

4. Increase energy efficiency measures to reduce electricity consumption overall.This is another area where the EPA and many experts believe Texas has a lot of room to grow. The EPA estimates Texas could cut 1.78 percent of its current energy demand through efficiency measures — such as using better light bulbs and appliances and upgrading buildings. Continuing that pace through 2029 would yield 10 percent savings, the agency says, reducing the need for coal and gas generation.

Energy experts say consumers have played a major role in slowing the growth in energy demand. Household energy use has declined nationally for two decades, according to the federal data. In a February report, ERCOT said Texas' peak power demand was growing more slowly than previously thought, partly because of changes in consumer behavior.

Small changes can have a big impact. For instance, buildings account for almost 40 percent of the state’s total energy use and 70 percent of its electricity consumption, according to the State Energy Conservation Office. Changes to building codes, for instance, could have a major impact on the state’s energy needs. More than 20 Texas cities — including Houston, Austin, College Station and Denison — have recently tightened construction standards, and environmental groups have pressed state officials to overhaul the statewide code.

Another promising conservation tool is “demand response,” which relies on high-tech thermostats and meters that allow utilities to power down air conditioners, heaters or pool pumps when demand peaks. A 2012 report by the Brattle Group, a consulting firm, calculated that demand response shaved about 4 percent of energy use during peak demand times in Texas. But if the state took steps to erode barriers to expansion, the report said, that number could reach as high as 15 percent. While some utilities are taking steps to bolster demand response, efficiency advocates say huge obstacles remain. The biggest is that demand response companies cannot participate in ERCOT's wholesale energy market.

Outside of a few other small tweaks, those are the basic assumptions EPA made to decide how much Texas should cut its carbon emissions from power plants in the next two decades. There's no question they mean change for Texas and its power grid, although it's still an open question as to how difficult those changes would be — and to what extent economic factors were already driving some of them.

These rules themselves could see revision before Texas will have to officially tell the EPA how it plans to comply, so these numbers will probably change. And the assumptions could change, too: Natural gas prices could rise significantly, Texas could grow more or less than expected, and unforeseen weather or disasters could impact energy prices and consumption.